Hard drive industry shows resilience

Despite industry leader Seagate's poor showing earlier this year, analysts say there's still plenty of demand for hard disk drives.

In the first quarter of 2008, HDD vendors shipped 137 million drives, which is 21 percent higher than the same quarter the year before, according to iSuppli, a market research company which keeps track of the industry. Those drives are primarily being snapped inside notebook PCs, other portable devices, desktops, and external drives.

(Credit: Hitachi)

Things weren't looking so good when Seagate reported its earnings in April, and revenue was below what analysts were expecting. But the demand for HDDs wasn't the issue, according to iSuppli.

"Seagate's second-quarter net income did come in lower than expected, but this was not because of any decline in demand, but rather due to lower prices for its products," according to Krishna Chander, iSuppli's senior analyst for storage systems.

Vendors like Seagate can charge more for HDDs for notebooks than they can for desktops, and though desktop PCs shipments are down, notebook sales are doing very well. The PC industry got a good report last week when IDC and Gartner revealed data showing the worldwide PC industry growing at a healthy clip, despite economic uncertainty in the U.S.

What's interesting is that the report says demand for the traditional magnetic drives is still strong despite the advancement of flash-based solid-state drives. iSuppli says vendors are on track to ship 573 million drives by the end of this year, which represents 11 percent growth over last year's final tally.

Lower prices and bigger capacities are keeping HDDs competitive in the face of the increasing popularity of solid-state drives. Though NAND flash memory will also continue to get more affordable, iSuppli says traditional hard drives will stay ahead for now.